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The Florida Land Boom of the 1920s was a bubble: https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s https://en.wikipedia.org/wiki/Florida_land_boom_o

The Florida Land Boom of the 1920s was a bubble: https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s But after 1935, Florida took off and grew like crazy. Even if you bought at the peak of the bubble, by the 1940s you had still gained some value. The USA stock market went through one of histories greatest bubbles from 1927 to 1929. Afterwards, it took the stock market 24 years to recover. But by the mid 1950s, the stock market was rising to new heights. The DotCom boom was clearly a bubble in 1999, but eventually many of the ideas became far more valuable than the heights of 2000. If the bubbles form because investors are looking too far forward into the future, eventually the future does arrive, and then you see a period of sustained growth. That is exactly what happened in Florida, with the bubble in the 1920s, and sustained growth beginning 15 years later, at the end of the 1930s, and lasting for several decades. My point is, if you wait long enough, the economy will often grow beyond even stupidly famous disasters. To be sure, you can probably find better investments. Buying into the stock market in 1929 and then waiting 24 years to get back to that level is not great for growing your wealth. But given time, many assets do grow beyond even the bubbles.

yumraj 5y ago
I think you make a good general point and I will agree, but it needs to be said that not every bubble will recover, for example the tulip bubble, beanie babies and so on. Crypto, NFT .. who knows, only time will tell who was right.
- 88840-8855 5y ago
  Don't forget the Japanese stock market that could never recover from the bu bubble in the 80s.
  - gruez 5y ago
    Technically it did recover. The price hasn't but if you factor in dividends (ie. total return), you'd be up 32.228% between 1989 and 2021.
    - weatherlite 5y ago
      Adjusted for inflation it's a huge loss. Sure it beat holding cash though, holding cash is for sure the worst thing you can do.
- hanniabu 5y ago
  I think crypto has already proven itself. Every time it's increasing people say it's a bubble, then it retraces and they say "see!", and then it recovers and excels and they repeat. Only the delusion would disagree.
  - boringg 5y ago
    Not proven yet. Still needs another decade and the illusive good use cases. We need to see the pandemic impacts abated to see if "crypto" holds value.
    - syntheweave 5y ago
      Pornhub's premium service already uses crypto and has since the credit card monopolies threw them out in 2020. I just checked - the only other way to pay is by ACH. If porn is the bellwether, then use cases have arrived.
      - smackeyacky 5y ago
        Or more likely, crypto has found yet another morally repugnant use. The CC companies withdrew from PornHub because their business model was paying for the production of child pornography. Crypto pops up its ugly head yet again. Not a coincidence given the other "killer apps" are extortion, money laundering and greater fool farming.
- vmception 5y ago
  Not everything is a buy and hold trade. The tulip bubble ended because the bubonic plague killed all the speculators and didn't even affect the spot market of tulips, so we don't even know what would happen. Worst bubble example. There were several great, rational, trades with beanie babies as well that has nothing to do with the latecomers that hoarded them and acted surprised and delusional when they were holding the bag. Out of all the famous bubbles, I think equities bubbles are more useful examples of irrecoverable irrational exuberance than any commodities/product bubble.
adwi 5y ago
"In the long run, we are all dead." - Keynes
- didericis 5y ago
  Intergenerational projects are worth pursuing. Those projects require intergenerational value. Going back to the moon, going to mars, making cities more livable, building Cathedrals, healing cultural trauma, making healthy families, creating better ways of life, enhancing health and lifespan, teaching and learning how the world works, figuring out consciousness, determining the secret to a good life, eliminating pain and creating ideal adventures… that is all possible with enough dedication on a long enough timescale and with enough forward thinking and endurance/adjustment. I get that ending deprivation in the now is important, but I can’t help but feeling we’ve been sacrificing the future to a decades long hedonic treadmill to satisfy base and immediate needs rather than future oriented striving.
  - bombcar 5y ago
    I fear it's inherent to our current interpretation of democracy. Individuals have very few incentives to look past their own lifetimes (and those incentives are almost entirely summed up as "their children"), which tends to downplay even projects that are only multiple decades. If it doesn't improve my life in 5-10 years why would I care one way or the other? And if someone tries to propose something longer term, it'll get shot down by someone who says "how about not and we spend the money on partying instead" or the equivalent. More and more I feel that we have to "sneak" long-term projects past people without them noticing.
    - imtringued 5y ago
      Sneak in a negative interest rate on cash and a land value tax while you are at it.
  - imtringued 5y ago
    You know, a positive interest rate implies that people would rather have something now than later. A 0% interest rate implies people value the future and present equally. A negative interest rate implies that people have more financial capital than they know what to do with which means it must be invested into capital with a long lifespan.
loeg 5y ago
Is that 24 year figure ignoring dividends?
onlyrealcuzzo 5y ago
You're forgetting to adjust for inflation. The 1927 bubble - adjusted for inflation - took closer to the late 1990s to get a reasonable return (when you were going into the second biggest bubble of all time). Nearly every investor would've died by then. Adjusting for inflation using shadow stats, you'd still have lost money. With the Florida land bubble - you're also forgetting property taxes.
- gruez 5y ago
  >Adjusting for inflation using shadow stats, you'd still have lost money. That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.
  - generalizations 5y ago
    That actually makes some sense.
    - gruez 5y ago
      "continual decline" is an understatement of how big the decline supposedly is. I calculated the actual decline in my other comment[1]. In short, if their figures are to be believed, the US economy contracted 67% in real terms between 2000 and 2020. That would put US GDP per capita between Guyana and Argentina. Even if you believe the "US is in decline narrative", it's hard to believe that it's been declining to the level of Guyana or Argentina. [1] https://news.ycombinator.com/item?id=31085430 https://news.ycombinator.com/item?id=31085430
      - deleted 5y ago
        [deleted]
      - generalizations 5y ago
        I don't know enough to debate the numbers, but if we're making external comparisons, my first question is whether the calculations for Argentina/Guyana have been altered to match the US shadowstat alterations.
ffggvv 5y ago
depends.. sure the nasdaq and some companies like amazon did great after the tech bubble crash. but alot died never to be seen from again.
padobson 5y ago
You should also add the survivorship bias caveat. If the bursting bubble wipes out the company you're invested in, you never get your money back.
- pavlov 5y ago
  Yes, this is an important point. Just looking at a stock market index over time doesn’t reveal the full picture because most investors in a bubble don’t buy the index. That would be boring and they’d miss on the imminent gains on the hot stocks! So instead they pick. If you picked ten stocks in 1928, many of them were bankrupt or near zero in five years. Same for dot-com stocks in 1999. So now you have maybe 10% left of your original capital. You could go conservative, invest it in the index and wait. Assuming a 8% annual gain it’s going to take you 30 years to make back the money you lost (not accounting for inflation). Or you could continue picking stocks and maybe increase the risk level to make the 10x gain you need to get even. The average bubble investor probably isn’t successful even over a period of decades.
isolli 5y ago
This is partly due to survivorship bias. I bet that anyone who bought Argentinian stocks in 1927 never recovered their investment. A lot of the dotcom investments simply failed and disappeared. And I'm sure there are examples of land booms that never recovered either.
mym1990 5y ago
Bubbles don't form because investors look too far in the future, bubbles form because investing turns into speculation and people stop evaluating value at all and just have a case of FOMO. At that point most speculators are buying with intent to flip in a short time period. On top of that, bubbles often carry high leverage, so its not like you lose what you have, you lose what you have and then also go into massive debt(person buys $1m house with 50k down and it goes underwater, or person uses 10x leverage to trade options on tech companies and they tank). Sure, the people that are able to cling on and wait it out for 2 decades might say 'this wasn't so bad after all!' but the people who lost their jobs or lost their families, went into bankruptcy, etc...well...you won't hear from those very often and if you do, you'll probably just say 'better luck next time'.
paulpauper 5y ago
The USA stock market went through one of histories greatest bubbles from 1927 to 1929. Afterwards, it took the stock market 24 years to recover. But by the mid 1950s, the stock market was rising to new heights. This also assumes you put no new money in the market and ignoring dividends. Buying the dip in the 30s, 40s would have cut this time to breakeven significantly. Also, we're talking a once in a 100+ year event. We may never see a repeat of a similar sized crash again in our lifetimes.
- ChuckNorris89 5y ago
  > Also, we're talking a once in a 100+ year event. The 2008 financial crisis was also a once in a 100+ year event. So was the 2020 Covid-19 pandemic. And the 2022 Russo - Ukrainian war. And now I wonder what "once in 100+ year event" we'll have next year.
  - jdminhbg 5y ago
    > And the 2022 Russo - Ukrainian war. That is absolutely not a once per century event. WWII was 80 years ago.
    - slg 5y ago
      It isn't even the first Russian invasion of Ukraine in the last decade.
    - paulpauper 5y ago
      yeah , foreign conflicts are not uncommon, the market historically does fine
  - paulpauper 5y ago
    the market recovered within a year after covid began. 2008 was closest to 1929.
    - ChuckNorris89 5y ago
      >the market recovered within a year after covid began. The market only "recovered" because the government intervened and infinite money got printed and poured onto it. Otherwise it would have crashed. The greatest wealth transfer in history is not "the free market recovered" but a rigged game.
PheonixPharts 5y ago
> if you wait long enough, the economy will often grow beyond even stupidly famous disasters. The only essential axiom you need for this to be true is infinite growth on a finite planet. Unfortunately it looks, from multiple perspectives, like we are hitting the limits of growth. There's a reasonable argument to be made that the true bubble we're in is an "industrial civilization bubble". All of that growth you're seeing can be boiled down to expending vast amounts of non-renewable energy. As we approach the environmental limits of that behavior, the trend you've observed over the past 250 years might not hold true.
- SuoDuanDao 5y ago
  "They hated PheonixPharts because he told the truth" But while your point stands, there are some wrinkles when we're considering things on a human scale. We probably can have (for human purposes) infinite growth in PDF's, MP3s, apps and browser games... we just won't want to pay for them with the same currency that pays for scarce resources. And while exponential growth is impossible, there is more solar radiation hitting the planet every year and will be for a time span close enough to infinity for planning purposes. So steady growth might be possible indefinitely (again, for human purposes).
- sumedh 5y ago
  Maybe in 50 years we could be mining asteroids and getting all our energy from the sun which could allow growing without any limits for a long time.
  - imtringued 5y ago
    You have convinced me that hostile aliens exist. They won't hunt humans to extinction, no they will legally acquire the rights to earth so that they can maintain infinite economic growth.
rrrrrrrrrrrryan 5y ago
But with even a small amount of leverage, you'd be completely wiped out. With 2x leverage and a 50% drop in the asset price, you're broke: there is no "just ride it out." The stock market is one thing, but anyone with a mortgage is leveraged to the tits, which is why real estate is so cyclical and the downturns can be so devastating.
throw8383833jj 5y ago
the reason bubbles form is because investors have no alternative (TINA - there is nothing else). In times of extremely high inflation (5% - 10%), you can't be in bonds or cash. So, this forces everyone into equities. Even at just 10% inflation, you'd loose half your cash in just 7 years. and the CPI figures underestimate inflation by at least 2-3% with all their hedonistic adjustments. it used to be that economists would get a basket of goods to measure inflation. there's hardly any need for that anymore. Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses, you just use housing as a proxy for inflation.
- ahtihn 5y ago
  > Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses Is that actually true for the median US resident? I have a really hard time believing it. I can believe it's the case in SF and some other big cities maybe.
  - throw8383833jj 5y ago
    not the median. But, the average person buying in at today's prices, is going to be pretty close to that. I saw one statistic that said 25% of millenials were living at home. and those that weren't, were spending 40% to 50% on housing. of course someone buying now, is even worse of than that 40% to 50%. I think a better measure might be # of hours worked to afford 1 sq ft. (1970 vs 2022)
- imtringued 5y ago
  I find it amusing that nobody really cares about inflation and only about the artificially induced housing shortage which has nothing to do with economics and instead is all about urban planning. People used to build cities like NYC but now they refuse to do that.

yumraj 5y ago

I think you make a good general point and I will agree, but it needs to be said that not every bubble will recover, for example the tulip bubble, beanie babies and so on. Crypto, NFT .. who knows, only time will tell who was right.

88840-8855 5y ago
Don't forget the Japanese stock market that could never recover from the bu bubble in the 80s.
- gruez 5y ago
  Technically it did recover. The price hasn't but if you factor in dividends (ie. total return), you'd be up 32.228% between 1989 and 2021.
  - weatherlite 5y ago
    Adjusted for inflation it's a huge loss. Sure it beat holding cash though, holding cash is for sure the worst thing you can do.
hanniabu 5y ago
I think crypto has already proven itself. Every time it's increasing people say it's a bubble, then it retraces and they say "see!", and then it recovers and excels and they repeat. Only the delusion would disagree.
- boringg 5y ago
  Not proven yet. Still needs another decade and the illusive good use cases. We need to see the pandemic impacts abated to see if "crypto" holds value.
  - syntheweave 5y ago
    Pornhub's premium service already uses crypto and has since the credit card monopolies threw them out in 2020. I just checked - the only other way to pay is by ACH. If porn is the bellwether, then use cases have arrived.
    - smackeyacky 5y ago
      Or more likely, crypto has found yet another morally repugnant use. The CC companies withdrew from PornHub because their business model was paying for the production of child pornography. Crypto pops up its ugly head yet again. Not a coincidence given the other "killer apps" are extortion, money laundering and greater fool farming.
vmception 5y ago
Not everything is a buy and hold trade. The tulip bubble ended because the bubonic plague killed all the speculators and didn't even affect the spot market of tulips, so we don't even know what would happen. Worst bubble example. There were several great, rational, trades with beanie babies as well that has nothing to do with the latecomers that hoarded them and acted surprised and delusional when they were holding the bag. Out of all the famous bubbles, I think equities bubbles are more useful examples of irrecoverable irrational exuberance than any commodities/product bubble.

adwi 5y ago

"In the long run, we are all dead." - Keynes

didericis 5y ago
Intergenerational projects are worth pursuing. Those projects require intergenerational value. Going back to the moon, going to mars, making cities more livable, building Cathedrals, healing cultural trauma, making healthy families, creating better ways of life, enhancing health and lifespan, teaching and learning how the world works, figuring out consciousness, determining the secret to a good life, eliminating pain and creating ideal adventures… that is all possible with enough dedication on a long enough timescale and with enough forward thinking and endurance/adjustment. I get that ending deprivation in the now is important, but I can’t help but feeling we’ve been sacrificing the future to a decades long hedonic treadmill to satisfy base and immediate needs rather than future oriented striving.
- bombcar 5y ago
  I fear it's inherent to our current interpretation of democracy. Individuals have very few incentives to look past their own lifetimes (and those incentives are almost entirely summed up as "their children"), which tends to downplay even projects that are only multiple decades. If it doesn't improve my life in 5-10 years why would I care one way or the other? And if someone tries to propose something longer term, it'll get shot down by someone who says "how about not and we spend the money on partying instead" or the equivalent. More and more I feel that we have to "sneak" long-term projects past people without them noticing.
  - imtringued 5y ago
    Sneak in a negative interest rate on cash and a land value tax while you are at it.
- imtringued 5y ago
  You know, a positive interest rate implies that people would rather have something now than later. A 0% interest rate implies people value the future and present equally. A negative interest rate implies that people have more financial capital than they know what to do with which means it must be invested into capital with a long lifespan.

loeg 5y ago

Is that 24 year figure ignoring dividends?

onlyrealcuzzo 5y ago

You're forgetting to adjust for inflation. The 1927 bubble - adjusted for inflation - took closer to the late 1990s to get a reasonable return (when you were going into the second biggest bubble of all time). Nearly every investor would've died by then. Adjusting for inflation using shadow stats, you'd still have lost money. With the Florida land bubble - you're also forgetting property taxes.

gruez 5y ago
>Adjusting for inflation using shadow stats, you'd still have lost money. That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.
- generalizations 5y ago
  That actually makes some sense.
  - gruez 5y ago
    "continual decline" is an understatement of how big the decline supposedly is. I calculated the actual decline in my other comment[1]. In short, if their figures are to be believed, the US economy contracted 67% in real terms between 2000 and 2020. That would put US GDP per capita between Guyana and Argentina. Even if you believe the "US is in decline narrative", it's hard to believe that it's been declining to the level of Guyana or Argentina. [1] https://news.ycombinator.com/item?id=31085430 https://news.ycombinator.com/item?id=31085430
    - deleted 5y ago
      [deleted]
    - generalizations 5y ago
      I don't know enough to debate the numbers, but if we're making external comparisons, my first question is whether the calculations for Argentina/Guyana have been altered to match the US shadowstat alterations.

ffggvv 5y ago

depends.. sure the nasdaq and some companies like amazon did great after the tech bubble crash. but alot died never to be seen from again.

padobson 5y ago

You should also add the survivorship bias caveat. If the bursting bubble wipes out the company you're invested in, you never get your money back.

pavlov 5y ago
Yes, this is an important point. Just looking at a stock market index over time doesn’t reveal the full picture because most investors in a bubble don’t buy the index. That would be boring and they’d miss on the imminent gains on the hot stocks! So instead they pick. If you picked ten stocks in 1928, many of them were bankrupt or near zero in five years. Same for dot-com stocks in 1999. So now you have maybe 10% left of your original capital. You could go conservative, invest it in the index and wait. Assuming a 8% annual gain it’s going to take you 30 years to make back the money you lost (not accounting for inflation). Or you could continue picking stocks and maybe increase the risk level to make the 10x gain you need to get even. The average bubble investor probably isn’t successful even over a period of decades.

isolli 5y ago

This is partly due to survivorship bias. I bet that anyone who bought Argentinian stocks in 1927 never recovered their investment. A lot of the dotcom investments simply failed and disappeared. And I'm sure there are examples of land booms that never recovered either.

mym1990 5y ago

Bubbles don't form because investors look too far in the future, bubbles form because investing turns into speculation and people stop evaluating value at all and just have a case of FOMO. At that point most speculators are buying with intent to flip in a short time period. On top of that, bubbles often carry high leverage, so its not like you lose what you have, you lose what you have and then also go into massive debt(person buys $1m house with 50k down and it goes underwater, or person uses 10x leverage to trade options on tech companies and they tank). Sure, the people that are able to cling on and wait it out for 2 decades might say 'this wasn't so bad after all!' but the people who lost their jobs or lost their families, went into bankruptcy, etc...well...you won't hear from those very often and if you do, you'll probably just say 'better luck next time'.

paulpauper 5y ago

The USA stock market went through one of histories greatest bubbles from 1927 to 1929. Afterwards, it took the stock market 24 years to recover. But by the mid 1950s, the stock market was rising to new heights. This also assumes you put no new money in the market and ignoring dividends. Buying the dip in the 30s, 40s would have cut this time to breakeven significantly. Also, we're talking a once in a 100+ year event. We may never see a repeat of a similar sized crash again in our lifetimes.

ChuckNorris89 5y ago
> Also, we're talking a once in a 100+ year event. The 2008 financial crisis was also a once in a 100+ year event. So was the 2020 Covid-19 pandemic. And the 2022 Russo - Ukrainian war. And now I wonder what "once in 100+ year event" we'll have next year.
- jdminhbg 5y ago
  > And the 2022 Russo - Ukrainian war. That is absolutely not a once per century event. WWII was 80 years ago.
  - slg 5y ago
    It isn't even the first Russian invasion of Ukraine in the last decade.
  - paulpauper 5y ago
    yeah , foreign conflicts are not uncommon, the market historically does fine
- paulpauper 5y ago
  the market recovered within a year after covid began. 2008 was closest to 1929.
  - ChuckNorris89 5y ago
    >the market recovered within a year after covid began. The market only "recovered" because the government intervened and infinite money got printed and poured onto it. Otherwise it would have crashed. The greatest wealth transfer in history is not "the free market recovered" but a rigged game.

PheonixPharts 5y ago

> if you wait long enough, the economy will often grow beyond even stupidly famous disasters. The only essential axiom you need for this to be true is infinite growth on a finite planet. Unfortunately it looks, from multiple perspectives, like we are hitting the limits of growth. There's a reasonable argument to be made that the true bubble we're in is an "industrial civilization bubble". All of that growth you're seeing can be boiled down to expending vast amounts of non-renewable energy. As we approach the environmental limits of that behavior, the trend you've observed over the past 250 years might not hold true.

SuoDuanDao 5y ago
"They hated PheonixPharts because he told the truth" But while your point stands, there are some wrinkles when we're considering things on a human scale. We probably can have (for human purposes) infinite growth in PDF's, MP3s, apps and browser games... we just won't want to pay for them with the same currency that pays for scarce resources. And while exponential growth is impossible, there is more solar radiation hitting the planet every year and will be for a time span close enough to infinity for planning purposes. So steady growth might be possible indefinitely (again, for human purposes).
sumedh 5y ago
Maybe in 50 years we could be mining asteroids and getting all our energy from the sun which could allow growing without any limits for a long time.
- imtringued 5y ago
  You have convinced me that hostile aliens exist. They won't hunt humans to extinction, no they will legally acquire the rights to earth so that they can maintain infinite economic growth.

rrrrrrrrrrrryan 5y ago

But with even a small amount of leverage, you'd be completely wiped out. With 2x leverage and a 50% drop in the asset price, you're broke: there is no "just ride it out." The stock market is one thing, but anyone with a mortgage is leveraged to the tits, which is why real estate is so cyclical and the downturns can be so devastating.

throw8383833jj 5y ago

the reason bubbles form is because investors have no alternative (TINA - there is nothing else). In times of extremely high inflation (5% - 10%), you can't be in bonds or cash. So, this forces everyone into equities. Even at just 10% inflation, you'd loose half your cash in just 7 years. and the CPI figures underestimate inflation by at least 2-3% with all their hedonistic adjustments. it used to be that economists would get a basket of goods to measure inflation. there's hardly any need for that anymore. Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses, you just use housing as a proxy for inflation.

ahtihn 5y ago
> Now that housing makes up 60%+ of everyone's (at least the latest generation of house buyers/renters) expenses Is that actually true for the median US resident? I have a really hard time believing it. I can believe it's the case in SF and some other big cities maybe.
- throw8383833jj 5y ago
  not the median. But, the average person buying in at today's prices, is going to be pretty close to that. I saw one statistic that said 25% of millenials were living at home. and those that weren't, were spending 40% to 50% on housing. of course someone buying now, is even worse of than that 40% to 50%. I think a better measure might be # of hours worked to afford 1 sq ft. (1970 vs 2022)
imtringued 5y ago
I find it amusing that nobody really cares about inflation and only about the artificially induced housing shortage which has nothing to do with economics and instead is all about urban planning. People used to build cities like NYC but now they refuse to do that.